Finance, BoU agree to deepen coordination on fiscal, monetary policy

KAMPALA: The Ministry of Finance and Bank of Uganda (BoU) have agreed to strengthen coordination between fiscal and monetary policy as part of efforts to safeguard macroeconomic stability and support sustainable economic growth.

The commitment was made on Wednesday during a meeting between Finance Minister Henry Musasizi, Bank of Uganda Governor Michael Atingi-Ego, Deputy Governor Augustus Nuwagaba and other senior officials from the central bank.

According to a statement issued after the meeting, discussions focused on improving collaboration between the Ministry of Finance, Planning and Economic Development (MoFPED) and the central bank, whose mandates are critical to managing the country’s economy.

The two institutions reviewed progress on Uganda’s fiscal consolidation agenda and discussed measures aimed at promoting prudent public spending to complement monetary policy and maintain macroeconomic stability.

Officials also examined ways of strengthening government cash-flow management and forecasting, which are considered crucial for effective budget implementation and economic planning.

Another key issue was the clearance of domestic arrears, which continue to affect businesses and service providers owed money by government entities.

The meeting further discussed the capitalization of the central bank, a process aimed at strengthening its financial position and enhancing its capacity to execute its mandate effectively.

The two sides also explored reforms in Uganda’s fixed-income and financial markets, including the development of the local currency bond market and a review of the primary dealer market-maker system.

The reforms are expected to deepen financial markets, improve liquidity and expand financing options for both government and private sector players.

In addition, officials emphasized the need to strengthen anti-money laundering and combating the financing of terrorism mechanisms to ensure Uganda does not return to the Financial Action Task Force (FATF) grey list.

Uganda was removed from the FATF grey list in 2024 after implementing measures to address weaknesses in its anti-money laundering and counter-terrorism financing framework.

Speaking after the meeting, Mr Musasizi, who was accompanied by State Minister for General Duties Ciccy Mulondo, pledged government support to enable the central bank to effectively carry out its responsibilities.

The Ministry of Finance and Bank of Uganda operate under a memorandum of understanding that provides a framework for collaboration and information sharing on key economic and financial matters.

Bank of Uganda Governor Dr Atingi-Ego said the central bank remained committed to a strong partnership with the ministry founded on transparency, policy alignment and respect for the distinct but complementary roles of the two institutions.

“We will safeguard macroeconomic stability and advance sustainable and inclusive growth for Uganda,” Dr Atingi-Ego said.

The meeting comes at a time when government is implementing measures to sustain economic growth, manage public debt, strengthen revenue collection and maintain price stability amid global economic uncertainties.

Economists have previously noted that close coordination between fiscal and monetary authorities is essential in supporting investment, controlling inflation and ensuring long-term economic stability.